Ony a few years ago the rare earth metal company was a high flier that seemed to just go higher and higher….
Molycorp and its subsidiaries filed for a Chapter 11 bankruptcy protection to facilitate its financial restructuring. The company filed its petition in the United States Bankruptcy Court for the District of Delaware on Thursday. The company said its non-operating subsidiaries in Barbados and Luxembourg are excluded from the filings.
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Molycorp Rare Metals (Oklahoma), LLC is also excluded because it is not 100% owned by the company. Molycorp is a producer of rare earth products used in electronic, transportation, industrial and clean energy applications.
“Our operations in Europe and Asia are not a part of today’s filings, and these businesses are cash-flow positive and play a vital role in many key industries worldwide,” said Molycorp CEO Geoff Bedford.
Molycorp restructuring agreement
Molycorp entered into a restructuring agreement with creditors that hold more than 70% of the total principal amount of its 10% senior secured notes. According to the company, the deal provides a financial restructuring of its debt worth $1.7 billion.
The agreement also provides up to $225 million in gross proceeds in new financing to support its operations while completing its negotiations with creditors.
Molycorp said a group of its 10% senior secured noteholders including JHL Capital Group, JMB Capital Partners, and QVT Financial committed as much as $225 million in gross proceeds of debtor-in-possession (DIP) financing. The deal is subject to court approval.
According to the company, approximately $40 million out of the committed financing will be available immediately after its initial court hearing. Molycorp expected that another $90 million would be available at a subsequent hearing by the end of the first month of the case, subject to court approval.
Molycorp said the remaining funds would be available on a delayed basis and subject to lender conditions. The company said the final maturity of the DIP financing is on November 30, 2015, which can be extended until December 30. It is expecting to exit the Chapter 11 bankruptcy protection by the end of this year.
“The actions we have taken today are important steps toward achieving a restructuring of our $1.7 billion debt with our major creditor constituencies. In doing so, the Company expects to exit Chapter 11 with an appropriate financing framework to support our business going forward,” said Bedford.
Molycorp expects its shares to be delisted on the NYSE
Bedford said its facilities are operating as usual, and its employees are working on their regular schedules in North America and overseas. He added that the purchasing of goods and services would continue.
Bedford emphasized that all purchases made after the company’s filing for bankruptcy protection were granted a special administrative priority under the law.
Molycorp expected to receive a notice from the NYSE that its shares will be delisted. The company will be trading its shares on the OTC Pink Sheets exchange.